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yesterday

Waller Says Fed Can Wait on a September Hike, Markets Rapidly Reprice Risk

Markets cut the odds of a September rate rise to roughly 50% after his conditional pause and shifted attention to upcoming U.S. payrolls and CPI as the deciding tests.

FILE PHOTO: Holograms, which show different images and colours depending on the angle at which they are viewed, are seen on the new Japanese 1,000 yen banknote as the new note is displayed at a currency museum of the Bank of Japan, on the day the new notes of 10,000 yen, 5,000 yen and 1,000 yen went into circulation, in Tokyo, Japan July 3, 2024. REUTERS/Issei Kato/Pool/File Photo/File Photo
The Federal Reserve is seen from the Washington Monument, Tuesday, Sept. 1, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)
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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 7, 2026. REUTERS/Jeenah Moon/File Photo

Overview

  • Fed Governor Christopher Waller told Reuters on Thursday he would support holding policy in September if incoming data shows continued disinflation, but he would back a hike if inflation surprises on the upside.
  • Traders responded by dialing back the chance of a September hike to about 50% on the CME FedWatch tool and pushing the U.S. 10-year Treasury yield down toward roughly 4.75%.
  • U.S. stock indexes rallied, with the Dow adding several hundred points intraday as investors rushed back into risk assets after the repricing of policy odds.
  • Oil prices remain elevated near the mid‑$90s per barrel because of renewed U.S.-Iran military exchanges that keep inflation risk and market uncertainty higher than normal.
  • Markets are now unusually data‑sensitive with the official August payrolls and next CPI prints seen as the decisive inputs that could reopen the path to a September hike or cement a pause.